Alternative Energy ETFs Could Be the Wave of the Future

By Tom Lydon | September 25, 2008 | 1:32 PM | 0 Comments

You may have noticed that oil prices and exchange traded funds (ETFs) have been a tad volatile lately.

On Monday, we witnessed one of the most volatile days for the commodity ever, where prices rose 15.7%. Trading was actually suspended once the $10 trading daily limit was reached, before resuming a few seconds later after a new limit was set.

The rest of this week has been fairly quiet, but some analysts say that oil isn't done by a long shot. Among the signs they cite as evidence that it's poised for another climb are a shrinking global supply, dollar weakness and overall nerves about the government's rescue plan.

Naturally, returning price volatility for oil has got investors once again thinking about alternative energy. Concern about global warming is a factor, but often when people are hit in the wallets is when real change takes place. 

To sweeten the push toward renewable energy sources, the U.S. Senate has voted to back a tax extender package that includes an 8-year extension of solar investment tax credits. The House still has to approve the plan, which might not come quickly. The extension for the solar plan is longer than the bill's one-year extension for wind credits and two years for other sources of renewable energy, Eric Savitz at Barron's wrote on Wednesday.

Between tax credits, increasing concern about global warming and through-the roof prices of fossil fuels that, depending on whom you talk to, aren't going to get much cheaper - the alternative energy could stand to gain. Interest in the sector, however, needs to remain strong with both businesses and consumers, and the government needs to remain committed to encouraging adoption of these technologies.

Meanwhile, there are a growing number of ETFs investors can turn to in order to get broad exposure to different areas of alternative energy (as opposed to individual stock picking and trying to guess which solar or wind company will surge ahead of the pack):

•  Claymore/Mac Global Solar Index (NYSE: TAN)
•  PowerShares Global Wind Energy (NSDQ: PWND)
•  First Trust NASDAQ Clean Edge U.S. Liquid (NSDQ: QCLN)
•  iPath Barclay Capital Global Carbon Total Return (NYSE: GRN), up 18.5%
•  Market Vectors Global Alternate Energy Fund (NYSE: GEX)
•  Market Vectors Solar Energy (NYSE: KWT)
•  PowerShares Wilder Hill Clean Energy (NYSE: PBW)

 

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